 "Two auctions to determine subsidy for gas-based power plants")
It has classified 14,305 megawatts (Mw) as stranded gas-based power capacity, which will get the lion's share in subsidy. Another 9,845 Mw with tie-up for domestic gas but an average plant load factor (PLF) of only 32 per cent owing to non-availability of enough fuel, too, would be bailed out but with an overall kitty of Rs 500 crore available.
Since the scheme is primarily intended to address lenders' concerns, all receipts and payments made by distribution companies for purchase of power generated from these plants would be routed through a single "trust and retention" account. This account would be controlled by the lead lender to the power generator.
Twenty-nine power plants, including six of NTPC's, Tata Power's Trombay, Mahagenco's Uran, Lanco's Kondapalli, CLP India's Paguthan and Torrent's Sugen power plants would be eligible for a higher subsidy ceiling of Rs 1.26 a unit (kilowatt an hour) in the current financial year (FY16) and Rs 1.28 in the next year.
Thirty power plants, which fall in the stranded category including NTPC and GAIL India-run Dabhol, GMR's Vemagiri, Torrent's Vatwa and Reliance Power's Samalkot power plants would be eligible for quoting subsidy with a lower ceiling of Rs 0.94 a unit (kilowatt an hour) for the current year and Rs 0.95 for 2016-17. These plants had nil power generation during April 2014 to January 2015.
An empowered pool management committee (EPMC) has been constituted under the chairmanship of special secretary in the power ministry. The committee would draw up the list of eligible gas-based plants, based on target plant load factor, for taking part in the bidding.
The committee would also fix the target PLF and price for power. The indicative 'target price' would also be different for the two categories of power plants. Stranded power plants would get Rs 5.5 a unit, which would be the net purchase price for the distribution companies. The committee has, however, been empowered to alter the price based on the response of e-bidding.
Of the 24,150-Mw gas grid-connected power generation capacity in the country, 14,305 Mw of capacity has currently no supply of domestic gas. This represents an investment of Rs 60,000 crore, which is at the threshold of becoming non-performing assets. The balance capacity of 9,845 Mw, involving an investment of Rs 40,000 crore, is working at a sub-optimal level based on the limited quantity of domestic gas in the country.
The eligible bidders while participating in the reverse e-auction will be required to indicate during the online bidding process, the total incremental electricity they would generate using the e-bid re-gasified liquefied natural gas. They would also need to quote the support or subsidy they require in order to ensure the net purchase price for the distribution companies is not more than the target price decided by EPMC, without exceeding the target PLF.
The lead banker to these plants would ensure all receipts of money would be utilised only for payments towards the variable cost of generation (fuel cost) and the operation and maintenance expenses in accordance with regulatory guidelines. Debt servicing would be made after capping fixed cost.